Same day delivery = more cost

Three-hour and same-day delivery will be available on a national scale and beyond urban areas, an e-commerce and parcel delivery specialist says, for those customers who are prepared to pay and those retailers who are willing to subsidise some of the costs.

Jessica Ip, head of commercial & transformation at parcel delivery company CouriersPlease (CP), which delivered nearly 18 million parcels Australia-wide and internationally in 2017, has over a decade of experience in the delivery and e-commerce industries.

Previously working for Qantas Freight, Ms Ip says she has seen an increase in the conversation around same day delivery but warns these services will not be widespread across Australia without some cost to the retailer and customer.

“The recent discussions I’ve been having with customers have all been about same day, after hours and weekend delivery. A few businesses are starting to offer these services in some capital cities and Amazon is working on bringing its Prime services here, but the key point is that it is for a price. Whether these services are scalable, so that retailers and consumers are okay with the price points, is the question,” she said.

According to Temando’s most recent report, an equal 68 per cent of Australian online shoppers want express (1-3 days) delivery and standard (5-7 days) delivery, compared with 41 per cent of shoppers who want same day delivery and 37 per cent who want hyperlocal delivery. Customers are also only willing to spend $2 more on same-day delivery and $3 more on hyper-local delivery than they are on express delivery.

“To make these services widespread, online shoppers need to be comfortable with paying additional fees, and retailers need to be willing to subsidise some of the costs to make it commercially viable. But Australian shoppers are not as willing as shoppers in markets where these services are available to pay additional fees for faster delivery. In the US – where same-day shipping is widespread – shoppers are willing to spend US$18 for these services, whereas Australians only want to spend AU$13. While some consumers may want it, same-day delivery is not popular enough at this stage, because of the price point, to become scalable on a national level.”

Ms Ip also makes the point that Australia’s geography is very different to the rest of the world, which makes it hard to offer these services at a reasonable price. “While these services are being offered in the US and UK, Australia’s market is very different. We have a relatively small population, spread over vast distances, with very little infrastructure compared with other well-established markets,” she said.